Delphi Supplying Hybrid Systems to Shanghai Auto

Separately, Delphi said it has agreed to sell its global suspension and brakes business to another Chinese firm, BeijingWest Industrial.

As part of its hybrid development work, Delphi has teamed with U.S. battery supplier A123 Systems to design and engineer an air-cooled lithium-ion battery pack. Delphi said its hybrid system is "part of a larger effort to help develop alternative-energy vehicles in the local Chinese automotive industry."

In addition to the battery pack, the Delphi hybrid system includes a control unit, inverter motor drive and controller, converter and thermal management subsystems. A unit of Shanghai Auto, SAIC Motor, is handling vehicle-level system integration, hybrid control strategy and development of the software in the project.

SAIC and its various affiliates are investing up to $1 billion in hybrid-vehicle R&D, and they expect to have several hybrid vehicles on the market in China by 2011-'12.

Regarding Delphi's brake business, BeijingWest will acquire machinery and equipment, intellectual property and certain property. The transaction is subject to approval from a U.S. bankruptcy court.

Besides BeijingWest, media reports here said a private Chinese auto parts supplier, Tianbao Group, and vehicle manufacturer Beijing Auto also approached Delphi seeking to buy the U.S. company.

BeijingWest, which is 51 percent owned by Beijing-based steelmaker Shougang Group, earlier said it plans to build an auto-parts production hub in Beijing amid the Chinese government's efforts to boost the city's vehicle industry.

Inside Line says: More U.S. technology heads to China. — Paul Lienert and Vivian Jin, Correspondents